Chips Break Sales Record in 2013

SAN FRANCISCO — The semiconductor industry posted record sales in 2013, climbing 4.8% to reach $305.6 billion with December 2013 sales the strongest on record at $26.6 billion, according to a report from the Semiconductor Industry Association (SIA).

"I think it's a very significant moment for the industry and, importantly, we see momentum going into 2014. We're on page for further increases in 2014 and 2015," Brian Toohey, SIA president and CEO, told EE Times. "It's pretty easy to see in the connected car, the connected home, the Internet of Things -- the semiconductor is in really every type of product and…are becoming ubiquitous. There's a very favorable macro story for the industry."

Total sales for 2013 narrowly exceeded expectations from the World Semiconductor Trade Statistics (WSTS) organization's industry forecast, consistent growth across most regions and product categories. The Americas semiconductor market grew at three times the rate of other markets, increasing annual sales by 13.1% in 2013. Year-over-year sales also increased regionally in Asia Pacific (7%) and European (5.2 %) markets but fell over 15% in Japan.

"Japan is a weird story, they've been artificially keeping down exchange rate to stimulate exports, which has put a damper on sales in that market place. There could be better growth in 2014," said Falan Yinug, SIA director of industry statistics and economic policy. "Europe was really, really, really dragging things down in 2012 and first half of 2013, but they're recovering."

It's difficult to determine whether 2013's year-over-year growth is significant in itself as the industry has fluctuated greatly since 2008. While the industry remains cyclical, feast-or-famine cycles are slowing in favor of small but steady growth as the industry matures.
As an example of the industry's cyclical nature, chip growth remained flat between 2009 and 2010, grew between 20% to 40% in 2009, and was negative in 2008 and 2007. While 2004 and 2005 had nearly 10% annual growth rates, Yinug said 1985 to 1995 boasted 20% to 40% growth.

"We expect growth to accelerate to +8% in 2014 but many sectors within semiconductors including analog and PLDs have already discounted this growth," a Deutsche Bank Market Research release stated.

WSTS, however, forecast more consistent market growth in 2014 and 2015, up 4.1% to $317 billion this year. The market will grow 7.5% from 2013 to reach $328 billion by 2015.

The WSTS release stated:

All product categories and regions are forecast to grow positively in each year, with the assumption of macro economy recovery throughout the forecast period. By end market, wireless and automotive are expected to grow faster than total market, while consumer and computer are assumed to remain stagnant.

SIA's Yinug added that he expects 2013's multi-sector growth to continue in 2014, with "a lot related to an improving macroeconomic posture, especially in the US and some of the other markets that, in 2012 and beginning of 2013, were... holding the industry back."

There is a great deal of uncertainty now that the transition is underway, but then again there was already a certain degree of uncertainty before as the market settled in and the same cycle repeated itself. Uncertainty is just part of the dynamic with these kinds of forecasts. The only way to reduce uncertainty is to look at specific outcomes over many years carefully, which may be hard to do given the current state of the market.